Australia

AU Don't let renovations do your block

WHAT would you do with a $200,000 renovation budget? An extension, second storey, new open plan living zone?

To see how far your money can go, take a look at Network Nine's reality TV show The Block.

This year, the contestants received about $195,000 in cash and vouchers to renovate their whole floor apartment shells in to luxury three-bedroom, four-bathroom havens.

The properties, which go up for auction this weekend (July 27-28) are the most ambitious yet, with the show now in it's sixth series.

However, renovating homes has long been a keen pastime for Australian homeowners and investors.

More than $500 million a month, or about $6.5 billion a year, is spent on renovations, according to the Australian Bureau of Statistics.

But just what to do and how to spend the money can often be the difference between making a profit or overapitalising and wasting your money.

According to major property depreciation specialist Deppro, about 60 per cent of a renovation budget is spent on kitchens and bathrooms with the 40 per cent balance spread across the lounge, family room and bedrooms.

However, that may be about to change.

The Block judge and interior designer Shaynna Blaze says the new renovation frontier is the outdoors.

"Open plan living is obviously really big but now it's gone further and we are wanting indoor and outdoor spaces to flow," she says.

"People are looking for a connection to the exterior through things like bi-fold doors, extending outdoor space and virtually doubling your living space by connecting to the outdoors."

However, what you do also depends on your plans. If you're planning to live in the property for another five years, the renovation should be "all about you".

"In this case you have to do it for yourself, your lifestyle and your priorities. You're the one who's going to live there so you need to make the renovation suit you," Blaze says.

"But if you're selling in under two or three years, then you must make sure what you're doing is going to meet the expectations of the market and that you are not going to over capitalise."

Be realistic about your budget, however, she says, the growth in house prices has slowed and large profit margins are more difficult to achieve.

"Prices aren't going up in jumps of $200,000 or so anymore," Blaze says.

"It's more likely to be $20,000 or $50,000 a year, so be realistic about what you expect the sale price to be. Do your homework and match your renovation budget accordingly."